Frequently Asked Questions About Closing on a House
As you move through the home buying process and get closer to signing the final paperwork, there will be a few final steps that you’ll need to go through before the home is yours and you can start moving in. In this article we’ll answer a few of the most commonly asked questions about closing on a home, including how long it takes, documents you’ll need to sign and more.
What Do I Need to Do Prior to the Closing?
After you sign the initial purchase agreement, you’ll have a number of responsibilities to take care of before the closing meeting. You’ll need to undertake a title search (see below), have a home inspection conducted, complete all of the paperwork for your mortgage financing, secure various forms of insurance and more. While much of what you need to do will be in the purchase agreement, your real estate agent can advise you of all of the miscellaneous tasks that you’ll need to complete. Check in with them regularly to ensure you’re not missing anything.
Why Do I Need to Get a Title Search Done on the Property?
A title search is one of the most important legal aspects of the home buying transaction and one that you’ll want to pay attention to. This search determines whether or not there have been any liens against the property, if there are any taxes or other debts owing, and if there are any restrictions on the property. In essence, the title search is your way of being 100 percent certain that the seller is legally able to sell you the home without issue. While the title search finds any issues in the vast majority of cases, it is highly recommended to take out title insurance (explained below) in order to protect yourself and your mortgage lender.
Is There Anything I Need to Bring to the Closing Meeting?
Your real estate agent will advise you of any documents that you need to bring to the closing meeting, but generally speaking you’ll want to bring your photo identification, your funds to purchase the home, the results of any home inspections, copies of any legal paperwork that you acquired in the home buying process, and proof of any insurance policies that you were required to take out as part of the purchase, such as homeowner’s insurance. You’ll also want to bring some positive energy – you’re about to take over your new home!
How Long Does the Closing Process Usually Take?
The length of time it takes your purchase transaction to fully close can vary significantly depending on the terms of your purchase agreement, how long each party takes to fulfill their responsibilities, and more. If you’re paying cash for your home and everything moves along very smoothly, the closing process can take under a week. However, if you’re taking out a mortgage and there are delays in the process such as a missing document the close can take up to one month to fully complete.
If possible, it’s a good idea to seek pre-approval for your mortgage financing from your lender or underwriter. Being pre-approved can speed the process up significantly compared to pre-qualification or simply walking in cold.
How Are Closing Costs Calculated?
Depending on the size of your purchase transaction and some of the variables involved, you can expect to pay anywhere from 2 to 5 percent of the home’s purchase price in closing costs. There are numerous items that go in to preparing a real estate transaction and there are fees and costs attached to each one of these. For example, you may pay fees for running a credit check, for processing the mortgage paperwork, for an attorney to look over all of the paperwork and run your title search, for a home inspection, for a property survey, and for having the title office record your new legal ownership of the home. You’ll also be responsible for property taxes and transfer taxes, and you may have to take out insurance policies such as title insurance (see below) as well.
The easiest way to get an idea of your closing costs is to ask your real estate agent or your lender to help you determine a reasonable estimate. In a pinch, simply use the 2 to 5 percent figure stated above.
What Documents Will I Sign on My Closing Day?
Every home purchase is different, and each transaction will have its own set of documents and legal paperwork that must be completed in order for the sale to be official. A few common documents you can expect to sign and receive in your closing package include:
Title Transfer – The title or deed transfer is a set of documents that transfers legal ownership of your home and property from the seller to you. Once these documents are signed you are the legal owner of the property.
Truth-in-Lending Statement – Federal law requires that your mortgage lender supply you with this document at closing, although in most cases you’ll have seen it well before then. The TIL basically describes all of the fine print of your mortgage loan, such as the interest rate, points, fees and more.
Title Insurance – in many buying transactions you’ll be required to take out a title insurance policy. This protects you and your mortgage lender from any future issues stemming from the title to your property. While your title search will almost always catch these, it’s best to have coverage just in case issues arise.
Mortgage Documents – on closing day you may be required to sign any remaining documents related to your mortgage loan.
Other Miscellaneous Documents – these will include any agreements you made with the seller during the negotiation process, tax documents and anything required by the local municipal or state governments.
The closing process can be a bit complex, so if you have further questions we’re happy to help answer them. Contact a member with 8z Real Estate at your convenience and let us know how we can help. Thanks for visiting and we look forward to helping you close on that perfect new home!